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Rolls Agrees to $2B Sale of Engine Subsidiary

Sept. 28, 2021
The engineering group is completing its downsizing and cost-saving effort by selling turbine manufacturer ITP Aero to a Bain Capital-led consortium.

Rolls-Royce Plc agreed to sell its ITP Aero subsidiary to a consortium led by private-equity group Bain Capital for $2 billion (€1.7 billion), completing a sell-off plan Rolls implemented in August 2020 to off-set pandemic-related losses and to reduce its ongoing “capital intensity.”

The sale is seen closing in the first half of 2022.

ITP Aero (Industria de Turbo Propulsores) is a Spanish aerospace and engine component manufacturer that Rolls-Royce established as a joint venture with SENER in 1989, but it has been Rolls’ wholly owned subsidiary since 2016. It supplies turbofan engines and components for civil and defense aircraft, as well as industrial gas turbines, with activities ranging from R&D, design, metalcasting, engine manufacturing, and testing.

At the close of 2020, having already announced the intended sale, Rolls added its aero-engine parts operation based in Hucknall, England, to the ITP Aero portfolio.

After the sale, Rolls will continue to source turbofan components and structures from ITP Aero. The current ITP Aero management led by Carlos Alzola will remain in place.

The Bain Capital consortium includes Spanish co-investors SAPA – which produces transmissions for heavy vehicles and military vehicles – and JB Capital, another private investment group.

The consortium committed to invest in growing ITP Aero’s products as well as in Spain and Basque region, where the business is headquartered.

“Today’s announcement is a significant milestone for our disposal program as we work to strengthen our balance sheet, in support of our medium-term ambition to return to an investment grade credit profile,” stated Rolls-Royce CEO Warren East. “This agreement represents an attractive outcome for both Rolls-Royce and ITP Aero … The creation of an independent ITP Aero is a great opportunity for the company, its people and other stakeholders. A financially, technologically, and industrially strong ITP Aero is also vital to Rolls-Royce. The company will remain a key strategic supplier and partner for decades to come.”